Another HRM Deficit - $11.8 mn

[Colin May]

HRM year end financial statements show a 2014/15 deficit of $11.8 million.
The staff report marks a significant change from the 2013/14 report which can
best be described as misleading.
Earlier this year during the budget process the public was allowed to comment at meetings of Committee of the Whole. I attended one meeting and suggested that HRM issue clear press release and clear explanations of the true state of affairs as to a year end surplus/deficit.


http://www.halifax.ca/boardscom/SCfi...617afsc911.pdf

[Drybrain]

People may disagree, but my two cents: Halifax should probably have MORE debt. We keep talking about how to pay for major transit expansion or other necessary big-ticket items, but our debt levels in 2012 (most recent year I can find figures for) was about $266 milllion.

Compare: Calgary will soon be four times larger than Halifax, but its debt is 16 times larger, at well over $4 billion.

Toronto, with six times the population, has a debt of about $4 billion as well, which puts it in better shape per-capita than Calgary, but still much worse than Halifax. (And Toronto’s debt is definitely going to grow as it builds all its fantasy subways in the ‘burbs and maintains its ridiculous, expensive, collapsing downtown expressway.)

Vancouver has about 1.5 times our population, and a debt of about $2 billion.
I could go on. Honestly, I don’t think debt is a desirable road to go down, but we’re far and away at the better end of the debt scale of Canadian municipalities. If we have to choose between being able to brag about being debt-free, and being able to boast of the civic amenities that will help push us to the next phase in our urbanization, I know which I’ll choose.

[someone123]

People think that you need to have an operating surplus for debt to go down, but what's really important is the ratio between the size of the debt and the tax base. If a city's tax base grows by 3% and the debt grows by 1%, it is better off and its debt load is lower.

Analogies to personal finance don't always work, but this is just like the impact of your income on your ability to pay off your household debt. You are in good financial shape if you have a reliable income of $100k and a mortgage of $400k, but you'd lose your house if you only had $15k a year of income.

Where it falls apart a bit, I think, is that governments that invest well can easily drive economic growth beyond the dollars they spend. Actually I doubt it's even possible to have much growth without government investment in infrastructure. The simple model of government as, say, a senior spending a pension cheque on rent and food is quite inaccurate.

It is possible that HRM's true debt level went down in 2014/2015, since the population and economy both grew.

[Keith P.]

Originally Posted by Colin May

HRM year end financial stements show a 2014/15 deficit of $11.8 million.
The staff report marks a significant change from the 2013/13 report which can
best be described as misleading.
Earlier this year during the budget process the public was allowed to comment at meetings of Committee of the Whole. I attended one meeting and suggested that HRM issue clear press release and clear explanations of the true state of affairs as to a year end surplus/deficit.


http://www.halifax.ca/boardscom/SCfi...617afsc911.pdf

No surprise really, given that they have been spending like drunken sailors on all sorts of wasteful things. I am surprised the number is not higher.

[Colin May]

Originally Posted by someone123

People think that you need to have an operating surplus for debt to go down, but what's really important is the ratio between the size of the debt and the tax base. If a city's tax base grows by 3% and the debt grows by 1%, it is better off and its debt load is lower.

Analogies to personal finance don't always work, but this is just like the impact of your income on your ability to pay off your household debt. You are in good financial shape if you have a reliable income of $100k and a mortgage of $400k, but you'd lose your house if you only had $15k a year of income.

Where it falls apart a bit, I think, is that governments that invest well can easily drive economic growth beyond the dollars they spend. Actually I doubt it's even possible to have much growth without government investment in infrastructure. The simple model of government as, say, a senior spending a pension cheque on rent and food is quite inaccurate.

It is possible that HRM's true debt level went down in 2014/2015, since the population and economy both grew.

Good points.
The deficit is an operating deficit, nothing to do with the debt.
Deed Transfer Tax was budgeted at $36 million and actual was $31.3 million.

For line item details go to : http://www.halifax.ca/boardscom/SCfi...617afsc912.pdf

The five Kelly years saw $37 million in surpluses and the 2 Savage years have deficits of $12 million.
Neither Kelly nor Savage can be held responsible for surpluses and deficits; the results are beyond their control. Economic activity is well beyond political control although some people prefer to believe otherwise.

In other news, Banner Developments will be purchasing Dartmouth City Hall subject to Council approval . Banner is a Dartmouth based company owned by Jeffrey Kavanaugh. To be discussed at Audit & Finance Cttee.
http://www.halifax.ca/boardscom/SCfi...617afsc915.PDF

[Colin May]

HRM Deed Transfer Tax Revenues (million)

1998/99 ....... 15,608

1999/00 ........ 16,819

2000/01 ....... 16,675

2001/02 ....... 21,074

2002/03 ........ 21,859

2003/04 ....... 23,456

2004/05 ....... 33,047

2005/06 ....... 32,097

2006/07 ....... 37,790

2007/08 ........ 34,700

2008/09 ....... 35,166

2009/10 ....... 33,344

2010/11 ....... 31,153

2011/12 ....... 39,302

2012/13 ....... 42,124

2013/14 ....... 35,777

2014/15 ....... 31,334

Notes :
Deed Transfer Tax (DTT) is set at 1.5% of sale price of a property.
DTT was set at 1.5% effective April 1 1999
HRM financial year is April 1 - March 31

The Killam Properties $27.5 mn purchase of properties on Hollis Street on March 31 2015 resulted in DTT of $412,500 and without this purchase the 2014/2015 DTT revenue would have been the lowest since 2003/4.

[Colin May]

HRM Deed Transfer Tax revenue for Q1 2015/16 is at its lowest level in the past 4 years

2012/13 - $10,138,394

2013/14 - $9,883,003

2014/15 - $9,462,781

2015/16 - $7,957,112

The decline represents a drop in property sales of $100 million compared with the same period a year earlier.
Quarterly data is not available prior to 2012/13

source : http://www.halifax.ca/boardscom/SCfi...916afsc911.pdf attachment 1